July 23, 2020

Since 1995, the number of Chinese students travelling to study full-time in Britain has increased 75 times over, from just 1,510 to 115,435. During the same period, domestic places rose a mere 50%, meaning that in just 25 years Chinese students have gone from a rounding error in universities’ balance sheets to their second largest source of funding, after taxpayer-funded loans.

In the last four years alone, the number of Chinese students studying in Britain has risen by 36%, more than three times the 11% rate of growth for domestic students.

This means that more Chinese students travelled to study in the UK last year than from the entirety of the Commonwealth or from the rest of the G7. Indeed, fewer full-time places on UK campuses went to young people from the East Midlands or Yorkshire and the Humber than from the People’s Republic of China. Among postgraduates, this concentration is starker: for every two and a half UK postgrads, there is now one Chinese postgraduate studying in Britain.

Given the financial dependence of universities on Chinese students, then, the increasingly menacing language coming from Beijing should worry vice-chancellors deeply, especially at a time when they face a Covid-related financial squeeze. Beijing has threatened “devastating consequences” in response to recent decisions on Huawei and Hong Kong. If those consequences are targeted at UK university campuses, as is happening increasingly in Australia, they will have profound consequences for this country’s students, taxpayers and competitiveness. 

With rising tensions over Hong Kong, it is no coincidence that the Chinese Ambassador, Liu Xiaoming, chose this month to remind Chinese students in Britain of their national duty. “Leverage your strength to extend the reach of China’s stories”, he told them, “serve your motherland”. Amid deterioriating relations with the West, he was sending a message that Beijing sees students not as free consumers of education exports but as propagandists and geopolitical pawns.

If China instructs its students to boycott Britain, it is almost certain that several institutions would fall over. New Onward research estimates that up to 16 universities rely on Chinese students for more than a fifth of their total fee income. The list includes many of the most prestigious and research-intensive institutions, including University College London, Imperial, Sheffield and Manchester, many of whom are already over-extended with debt and facing lower student flows due to the pandemic.

Because of the way overseas students cross-subsidise research, a fall-off in Chinese demand would also severely undermine UK science. Universities make an average surplus of £5,100 for every overseas student, of which £4,000 typically goes towards research. In total, overseas student fees contribute to a third of university research funding, meaning £1 in every £9 spent on university-led research in the UK relies on Chinese student income.

A further risk relates not to people but to influence. Unlike the United States, the UK has no formal controls on the foreign state funding of scientific research. In recent months, Jesus College Cambridge, Imperial College London and the London School of Economics have faced criticism after Freedom of Information requests revealed they had accepted funding from Huawei. But the reality is that no one — not even universities themselves — knows how much research funding comes from the Chinese state or its subsidiaries. Programmes like the Thousand Talents Plan, for example, are highly secretive.

If it seems extraordinary how much of this country’s research base depends on beneficence in Beijing, it is even more striking how few people recognised this as a strategic risk before the pandemic. In recent decades, the overwhelming consensus has been that higher levels of overseas students, especially from a growing Chinese middle class, are an unalloyed good that brings talent and money to Britain’s centres of learning. Politicians have gone out of their way to boost the concentration of students from China; Xi Jinping even began his 2015 state visit with a tour of Manchester University at the personal request of George Osborne.

The risks of overreliance on a single market — let alone an authoritarian country whose interests are diverging from our own — has never been debated. When I raised concerns about China’s dominance of student places in January, several liberal Twitter users scoffed. “Germany exports physical capital to China in the form of machine tools”, I was told, “the UK exports human capital in the form of education.” But universities are cultural and scientific institutions, not factories, and the collateral damage from a Chinese boycott of British universities would be far worse than similar action against German industrial machinery.

University places are also unlike other products because some institutions artificially constrain their supply, displacing lower-paying UK students. Oxford and Cambridge, for example, cap their student numbers, meaning there has been a decline in the number of state school pupils winning places in the last 20 years while the number of international students has sharply risen. Between 2014/15 and 2018/19, the number of UK students fell at Oxford, Cambridge, Imperial, UCL, LSE, Bath and Manchester, and flatlined at KCL and Durham. Even if overseas students have subsidised domestic growth in aggregate, at the best institutions it seems to have crowded them out.

This is a debate the UK needs to have without delay. In the last six months, the Chinese state has issued escalating threats of a student boycott of Australia in response to security laws and trade tensions, culminating in June with the Chinese Ministry for Education telling students to “exercise caution” before choosing to study there. Australian universities will lose an estimated £6.5 billion over the next two years if the warning is heeded. Chinese mainlanders are already banned from studying in Taiwan.

These moves have already prompted Canada to start diversifying their overseas student intake. The UK should urgently do the same. One simple way to do this, without throwing the baby out with the bathwater, would be to cap the number of students from any one country attending any single institution. This may be hard for some institutions in the short term, but in the long-run would have two virtuous effects: it would force universities to recruit more widely from overseas, diversifying the student body and improving resilience, and it could even spread the income from overseas students from the top universities down.

At the same time, ministers should make the expansion of overseas students contingent on growing the number of high-quality places for domestic students. We can hardly wonder why graduates feel dissatisfied with university, and gain ever less economic value from it, if the most prestigious courses and institutions are increasingly reserved for students from overseas.

Finally, universities should make much more transparent the funding that their academics receive from foreign bodies or governments. This is not in any way to say that international funding should be discouraged: research collaboration and exchange are essential to innovation. But we should accept that British taxpayers have a right to know — and to scrutinise — who is contributing to research at UK institutions, and what benefit they may be gleaning in terms of intellectual property, commercial partnerships or data.

The suspension of international travel from coronavirus has exposed the scale of universities’ reliance on overseas students. But the strategic risks existed before, and will persist long after, a vaccine has been developed. Politicians need to ask themselves a very simple question: are they comfortable with the fate of universities or the level of science funding being decided in Beijing rather than Westminster? If not, we must decouple and diversify.